In the mid-nineteenth century, the industrial structure of Gipuzkoa was thoroughly altered. Artisan practises gradually gave way to the advance of new production methods involving entirely new technical and mechanical equipment. Two industries were the main driving forces in this early Industrial Revolution: textile and paper. It would still be some time before iron-working, an essential activity in the industrial fabric of the province, was to be modernised.

With the first large-scale iron mining, and the installation of new furnaces for smelting the ore and the manufacture of steel in crucibles, there was a great move forward in the iron and steel industry. Initially, Gipuzkoa turned its back on these advances, clinging firmly, as we have seen, to traditional iron mongering. This was largely due to the competition in the industry from the neighbouring province of Bizkaia and its areas of influence. In addition to these shortcomings there was a shortage of raw materials-iron ore and coal-of sufficient quality.

But by 1860, any defence of the traditional forges was untenable and reality of the situation proved that such works were unviable compared to more modern ones containing large furnaces. Some experiments had been carried out in nearby regions with little success, including the installation of two blast furnaces at the Royal Commissioner's site in Liérganes (Cantabria) in 1628, the first charcoal furnace in Sagardelos (Lugo) in 1797 and the coke furnace in Trubia (Oviedo) a few years later. It was not until 1822 that Ramón de Mazarredo commissioned a French technician to install a blast furnace, forges and other elements necessary to obtain primary secondary smelted metal (IBAÑEZ, SANTANA, ZABALA, 1988).

In the next decade, the iron and steel industry gradually began to catch up throughout Spain. In 1832 the first iron was produced by the new blast furnaces in Malaga and soon cities such as Oviedo, Seville and Santander followed suit. Bizkaia, however, was to be the unquestioned leader of this process from 1848, when the flame of the blast furnace in the Santa Ana factory in Bolueta was first lit. Even in a general Spanish context this event was relatively insignificant, but it serves to highlight how far local techniques had fallen behind the European iron and steel industry, especially if we remember that for several centuries the Cantabrian coast had been considered the "iron factory" of Spain and its empire.

Gipuzkoa, which was directly involved in the processing, and to a lesser extent in the production of raw iron, was to hold back for another two decades yet. The first blast furnace was born out of the close ties between the traditional forge and the emergence of a modern iron industry. In 1860, Domingo Goitia and Martín Usabiaga, the owners of the Yurre and Yarza forges respectively, together with José Francisco Arana, owner of the land on which they stood in Beasain, went into partnership to create the "Fábrica de Hierros de San Martín de Urbieta" (1860), to try to tackle the obsolescence and non-competitiveness of their outdated works.

During the first two years of operation, while work was being carried out to install the great crucible, the iron was produced in puddling furnaces and rolled using cylinders. The iron still came from local forges. But what the two industrialists wanted to do was to smelt the ore in their factory using blast furnaces. They inaugurated the first one-which still used charcoal-in 1862 and in 1865 the first casting was made in a second, similar, furnace.

Two hundred and thirty four years had passed since Spain's first blast furnace had been built in Liérganes in 1628. Introduction of this technology had come very late to Gipuzkoa, but from this point on the modern iron and steel industry began to take over from traditional forges. The reasons for the change included better quality and lower costs. Although the two systems coexisted for several years to come, remarks such as this one, published in Estadística Minera [Mining Statistics] in 1867, were becoming increasingly common:

it will be very difficult for [the forges] to survive much longer, for many reasons but principally because this furnace [San Martín de Urbieta] uses 120% charcoal and 150% white coal for every 100 of soft iron; whereas the amount of charcoal consumed by them [the forges] is never less than 300%"

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In 1870 this factory alone produced 42,000 quintals of iron (about 2000 tonnes), compared to a total of 7,120 quintals (about 325 tonnes) produced by the fourteen forges still operating in the territory (LEGORBURU FAUS, 1996).